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Waste Connection (WCN) Gains on Acquisitions Amid Low Liquidity

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Waste Connection (WCN - Free Report) stock has jumped 13.7% in the past three months, outperforming the 9% rise of the Zacks S&P 500 composite.

WCN reported solid fourth-quarter 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimates. Adjusted earnings (excluding 62 cents from non-recurring items) of $1.11 per share beat the Zacks Consensus Estimate by 2.8% and increased 24.7% year over year. Revenues of $2.04 billion surpassed the consensus estimate by a slight margin and rose 8.9% year over year.

How Is WCN Doing?

Waste Connections focuses on providing vertically integrated services from collection through the disposal of solid waste in landfills that it owns or operates. The operations are managed on a decentralized basis, allowing the authority to make decisions to be vested in customers, enabling it to identify and address customers’ needs on a real-time basis in a cost-effective manner. Such a low-cost, highly efficient operational structure assists it in expanding geographically and operating in relatively small communities that are unsuitable for its competitors.

Waste Connections has been active on the acquisition front. It follows a strategic combination of financial, market and management criteria to evaluate opportunities from acquisitions. In 2024, the company acquired the Secure Energy Services portfolio of 30 energy waste treatment and disposal facilities in Western Canada. In 2023, the company completed 13 acquisitions, including Arrowhead Environmental Holdings, which enabled WCN to integrate markets using Arrowhead’s extensive waste-to-rail disposal network in the Northeast United States.

Waste Connections rewards its shareholders consistently. In 2023, 2022 and 2021, the company paid out $270.6 million, $243 million and $220.2 million in dividends, respectively. Such strategies will assist it to create value and boost confidence for shareholders, aiding its bottom line.

Waste Connections’ current ratio (a measure of liquidity) at the end of fourth-quarter 2023 was pegged at 0.68, lower than 0.73 in the preceding quarter and the year-ago quarter's 0.74. A current ratio of less than 1 indicates that the company may have problems paying off its short-term obligations.

Zacks Rank and Stocks to Consider

Waste Connections currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are AppLovin (APP - Free Report)   and DocuSign (DOCU - Free Report) .

AppLovin flaunts a Zacks Rank #1 (Strong Buy) at present. APP has a long-term earnings growth expectation of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.

APP delivered a trailing four-quarter earnings surprise of 26.5%, on average.

DocuSign currently carries a Zacks Rank of 2 (Buy). DOCU has a long-term earnings growth expectation of 13.3%.

DOCU delivered a trailing four-quarter earnings surprise of 23.7%, on average.


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